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Asian Crisis 1997

Page history last edited by Brian D Butler 9 mos ago

 

Was the Asian crisis the result of Japanese (lost decade) savings fleeing their crisis...which flooded the region with credit?  I read this "Japanese savings fled their own bust and sloshed first into the Nordic countries and then into Asia, which suffered contagion in 1997."  source:  http://www.economist.com/printedition/displayStory.cfm?Story_ID=12957709#

 

 

 

SE Asia Crisis - 1997 & 1998   http://en.wikipedia.org/wiki/Asian_financial_crisis

 

 

An economic crisis becomes a catastrophic recession only if it blocks the provision of capital to businesses long enough to generate widespread corporate failures. This blockage is what made the Asian financial crisis so devastating. Net capital inflows to the region, $93 billion in 1996, turned into net outflows of $12 billion in 1997. Local banking systems just couldn’t provide the capital to plug this gap, foreign banks weren’t prepared to extend credit, and the International Monetary Fund (IMF) moved too slowly. As a result, businesses couldn’t finance working capital, let alone investment, and failed to obtain the export financing these countries needed given the high share of exports in their GDPs. Once the flow of credit had been restored, the economies affected by the crisis recovered quickly.

 

 

 

 

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